Reflections of a Newsosaur

Tuesday, July 14, 2015

What good is the Apple Watch, anyway?

The smartwatch market is so small that it only took a day or two for the Apple Watch to emerge as the biggest selling techno-timepiece in history. Now that it has been a while since the world’s most expensive Mickey Mouse watch has been glitzing the wrists of a few million early adopters (Apple coyly won't say how many), it’s time to ask what the thing is good for, anyway. The positive perspective from – full disclosure – this Apple shareholder is that I think the bauble may prove to be no less than the precursor of a paradigm shift in personal computing. More on that in a moment.

But, first, I have to say that I am skeptical about whether smartwatches can deliver much value to media companies desperately seeking to burnish their digital bona fides. In fact, I think publishers should be cautious about dedicating significant resources to developing smartwatch apps, because the best ideas that publishers have marshaled so far verge on being downright irritating to consumers. Here’s why: Given the teensy size of smartwatch screens, it is not possible to tell full stories on them – and the user experience would be unpleasant if publishers tried. Recognizing this limitation, most publishers have elected to publish one-screen text alerts, which buzz the user’s wrist when a new one arrives. The problem, as noted by many early reviewers of the Apple Watch, is that they are inundated not only with pings for breaking news but also with daylong vibrating alerts to incoming emails, tweets, texts, meeting reminders, pizza deals and, well, you get the idea. While users will welcome the sparing use of text alerts for truly significant events – like an incoming tornado – publishers need to eschew text as much as possible in favor of graphically packaged information that can be consumed at a glance. So far, we haven’t seen much of that sort of creativity.Because even animated emojis get old fast, the first order of business for many Apple Watch users is figuring out how to reduce incoming alerts. Therefore, it is fair to conclude that publishers who think relentless news alerts are the killer app are likely to find the only thing getting killed is their audience. Fortunately, there are better ideas. Instead of using smartwatches to distribute information, publishers should use them to interact with consumers in new and innovative ways through crowd reporting, polls, surveys, games, quizzes and other initiatives that take advantage of the persistent presence of the what Dick Tracy would instantly recognize as a two-way watch radio. These activities can be coupled with subtle and sensible commercial promotions to (a) boost revenues, (b) capture granular data that publishers can sell to advertisers and (c) leverage the very same data to enhance publisher marketing capabilities. Now, here’s why the Watch bears watching: The old way of computing required active engagement and considerable skill on the part of users to persuade the clever but obstreperous machines to serve their needs. Smartwatches are different, because they are passive devices that are unobtrusively strapped to your body throughout the day. The ubiquity and intimacy of a computing device that knows your heartbeat better than you know it yourself is unprecedented in the history of computing.With scant effort on your part after you fire them up, smartwatches monitor your health by tracking your footsteps, your sitting time and the intensity of your workouts. They can serve as personal assistants, keeping you on schedule, routing you around traffic jams, presenting your boarding pass and unlocking your room at certain high-tech hotels. They can remember where you parked your car, remotely start the engine, unlock the doors and open the garage when you near home. They already can complete credit card transactions with the flick of a wrist and in the future could become repositories for your identity, replacing your driver’s license, serving as your office badge and archiving vital medical information like your DNA. Smartwatches could well emerge as the master controllers in the so-called Internet of Things, because they will be the single device that knows who you are, where you are, what are doing and what you are likely to want to do next. As discussed earlier here, it won’t be long before the techiest homes are wired with sensors, microphones, projectors, speakers and wall-sized displays that provide on-demand access to sports scores, shopping services, cooking videos, music and anything else you please. The Apple Watch, the Pebble and other competing smartwatches may not turn out to be the direct forebears of this sort of ubiquitous computing, but something awfully close to them will be. So, yes, smartwatches matter. Only time will tell how much they can do beyond just telling time.

Thursday, June 11, 2015

Mobile moves to digital ad domination

Any day now, we will cross another technological tipping point, as the majority of digital advertising purchases moves to mobile devices from desktops and laptops. The shift could happen before the end of this year or early in 2016, according to a variety of industry prognosticators. Either way, the move will be profound in the coming years, with eMarketer forecasting that mobile will account for 72% of the $93 billion expected to be spent on digital ads in 2019. The reason is simple: Mobile is where the eyeballs are. The Pew Research Center reported in a comprehensive study in April that more than 90% of Americans owned some sort of mobile phone and that two-thirds of the devices were smart ones. Meanwhile, eMarketer.Com reported that Americans were spending just short of three hours a day on their mobile devices, as compared with only 24 minutes a day in 2010.

With growing attention riveted on these pocket-sized media machines, it’s no surprise that ever more advertising dollars are shifting to mobile from the traditional print, broadcast and digital media. Mobile will capture nearly a quarter of the entire ad spend across all media in the United States in 2018 vs. only 3% in 2012, according to eMarketer. Assuming the projection holds true, mobile ad spending could be second only to television within three years, which captured 39% of the ad dollars in 2012 but is projected to shrink to 36% in 2018. Mobile’s momentum creates major opportunities and challenges for marketers and publishers, given the following superpowers: It’s addictive. Because mobile phones are always there and always on, they represent the most intimate, immediate and individualized media experience ever created. In its April study, Pew found that 67% of smartphone owners frequently check their devices even when they don’t ring or vibrate, 44% said they slept next to their phones to avoid missing calls and 29% said they “couldn’t live without” their ubiquitous electronic companions. The powerful attraction that mobile phones hold over their owners overcomes the single greatest challenge facing advertisers: capturing a customer’s attention. It’s targetable. Because mobile phones have the capability of knowing who you are, where you are, where you are going, what you are reading and where you are shopping, they represent an unprecedented opportunity to send targeted offers to the right customer in the right place at the right time. The more consumers use their phones, the more data is potentially available to marketers to create compelling and customized offers. Magna Global, the international ad agency, predicts that 82% of digital display ads will be bought and sold by computers, not Mad Men, by the end of 2018. That represents more than $25 billion in volume. It’s social. Although smartphones are used to surf the web, shop, play games, listen to music, capture images and sometimes even make telephone calls, the top activity among young consumers is interacting with their social networks. In its study earlier this year, Pew found that 91% of users between the ages of 18 to 29 used their smartphones to interact with their friends. If word-of-mouth is the Holy Grail of advertising, then it’s easy to see why marketers worship this platform.

It’s transactional. While your fingers may have done the walking in the olden days of the Yellow Pages, your thumb does the shopping today on a mobile device – pointing, clicking and buying in one, smooth motion. Global mCommerce sales are forecast by Goldman Sachs to triple to $626 billion in 2018, a sum almost equal to all the stuff sold on all the world’s digital platforms in 2013. The convenience and customization of mobile shopping streamlines commerce like never before. It’s measurable. The bundles of Big Data captured through mobile computing give marketers the ability to generate an unprecedented amount of actionable insights about consumers. As the art and science of targeting improve, marketers will further sharpen the pinpoint propositions they put to individual consumers. At the same time brands use data to boost the efficiency and efficacy of their advertising, they will tally clickthrough, sellthough and other metrics to continuously fine-tune their tactics.It’s unavoidable. Because mobile advertising will force marketers to be accountable for the costs and results of their campaigns, advertisers are bound to hold publishers accountable for their performance, too. As mobile becomes the primary platform for digital – if not all – publishing, it will demand ever greater sophistication from every publisher aiming to succeed in the interactive realm. Publishers will have to have the technology and the personnel necessary to capture data, categorize customers, target offers, analyze performance and dynamically tweak their content and advertising offerings to continuously improve performance. In other words, legacy media companies hoping to succeed in mobile publishing can’t get away with simply selling buckets of miniaturized, run-of-site banners.

Thursday, June 04, 2015

1 of 4 news start-ups flamed out

In 2009, David Boraks wrote an inspiring guest post here about the launch of his hyper-local news site in Davidson County, NC. Last week, he reluctantly shut it down, saying, “Alas, we haven’t turned it into a sustainable business.”He is far from alone. One of every four news startups has failed, according to a survey I conducted of the 141 ventures listed in an online directory published by the Columbia Journalism Review since 2010. The survey methodology was simple. I searched for every site listed in the CJR list and counted the number that either were defunct or had not posted any new content since 2014. Because CJR depends on news entrepreneurs themselves to list their efforts, not all start-ups–or eventual crackups– are included. But the CJR sample is big and diverse enough to alarm those who hope grassroots journalism will replace the news-gathering resources that have been reduced over the years by newspapers and other local media. Since 2000, one out of three newsroom jobs has been nuked at the nation's newspapers, according a survey by the American Society of News Editors. The idled projects on the CJR list range from A2 Politico, an Ann Arbor (MI) effort which evidently has not been updated since 2013, to Yadkin Valley (NC) Sports, whose web address leads to a placeholder site with no content whatsoever. The toll also includes such high-profile, well-funded and ill-managed ventures as the Chicago News Cooperative and the Bay Citizen in Northern California. A late-breaking addition is the Bold Italic, a recently discontinued effort in San Francisco that had been funded by Gannett as a digital innovation laboratory. Although my survey did not delve into the circumstances contributing to the demise of each of the various news ventures, the cause of death in most cases likely was the one cited by Boraks in the farewell message to his readers in North Carolina:“We’ve been unable to sell enough advertising to local businesses to sustain the sites, to pay me and, lately, to pay our staff,” he wrote. “At the same time, voluntary support from readers – which has always been limited – has dropped off.”Although it is painful to watch journalism entrepreneurs flame out, it is important to note that far more new businesses fail than succeed. Even in the technology world, where a handful of garage tinkerers indeed became billionaires, some 80% to 90% of all start-ups fail.Failures occur in Silicon Valley in spite of the millions of dollars in reasonably patient venture funding that supports most nascent companies. Further, there is an abiding focus, if not to say frenzy, at nearly every start-up company on building the value of the enterprise as quickly as possible so it can go public or get bought by a sugar daddy like Google or Facebook. Neither of the above conditions is present at most news ventures, where the founders are admirably intent on afflicting the comfortable and comforting afflicted but put scant attention into funding the next payroll. As reported previously here, the Pew Research Center found that nearly a third of news start-ups spent less than 10% of their staff time on business development, while more than half said such activities occupied between 10% and 24% of their time. By contrast, 85% of the ventures said editorial tasks consumed at least half of their time. Unless and until people conducting news ventures take the business of their businesses as seriously as they take their journalism, the failures will continue. Saying he had struggled to save his news project from a number of near-death experiences over the years, Borak clearly was intent on building a sustainable business. The lack of support for his effort among readers and advertisers suggests that the most intractable problem for news ventures may be a hopeless reluctance in the marketplace for paying for what journalists do.Even dedicated newsmen can’t afford to work for nothing. As rewarding and exhilarating as the experience was, Borak told his readers in his final missive, “We’re in debt, we’re exhausted and it’s time to go.”

Thursday, May 14, 2015

Why publishers had to partner with Facebook

The natural order of the universe was disrupted yesterday when BuzzFeed, NBC News, the New York Times and a number of other prominent media companies shockingly ceded to Facebook the marketing and monetization of portions of their valuable content. The move, which represents a further step in the transfer of power from the media tribe to the technology tribe, means that some of the biggest names in media have conceded that they are neither large enough nor strong enough to thrive as independent digital publishers without the help of at least one of their fearsome frenemies in Silicon Valley. In addition to Facebook, the other frenemy, of course, is Google. Although the media companies like to think that the quality of their work speaks for itself, Facebook and Google referrals steer the preponderance of the traffic to almost every news site. The Facebook deal institutionalizes as never before this long-running dependency. In addition to the trio mentioned above, the other media companies who will be funneling content to Facebook are The Atlantic, BBC News, Bild, The Guardian, National Geographic and Spiegel Online. Fearful of being left behind, it is fair to assume additional media names in the not-too-distant future will feel obliged to join, too. Here’s how the deal works: The media companies will give full articles and videos to Facebook, so the social network can distribute them among its more than 1.4 billion users. Publishers can keep all the revenue from any ads they sell to accompany the content they allow Facebook to post. When Facebook sells ads against the content contributed by the media companies, both sides will split the proceeds equally. The choice to throw in with Facebook could not have been easy for the proud media companies. Historically, the last thing they wanted was to give their expensively produced content to another brand competing for the same eyeballs and ad dollars. But that was then and this is now. The media swallowed their pride because they know they lack the sort of massive global reach that only Facebook can provide. Difficult as the decision may have been, it was inevitable, given the several critical capabilities that Facebook has developed. These are its not-so-secret superpowers:Superior mobile prowess. In addition to the sheer size of its audience, Facebook has mastered the art and science of mobile publishing better than almost anyone. In the first quarter of this year, the company reported, 65% of its traffic and 73% of its ad revenues came from such highly optimized mobile sites as its Paper app. Superior audience engagement. Based on the amount of time people spend on Facebook, it is fair to say its users are considerably more passionate about the service than the visitors to a typical news site. According to Alexa.Com, the average user spends 18.4 minutes per day on Facebook, as compared with 9.5 minutes at the New York Times, 6.4 minutes at NBC News and 5.4 minutes at BuzzFeed. Superior customer data. Because enthusiastic users frequently and liberally update the site with a plethora of personal data, Facebook knows more intimate and accurate details about more people than any company in the world. The information is updated dynamically in real time, as people report everything from their favorite new song to the jeans they want to buy to the fact they will have a baby in six months.

Superior ad intelligence. Facebook enables advertisers to target messages with heretofore unprecedented precision, thanks not only to the rich information supplied by users but also by analyzing information captured from the friends in their networks. The ad-intel is supplemented with location data acquired from Facebook’s popular mobile services. Superior content targeting. In the same way data is used to target commercial messages, Facebook has the capability to match the right content with the right user by monitoring her searches and media consumption. If Facebook sees that someone likes cooking Italian food, it can slip relevant recipes from the NYT food page into her news feed, paired conveniently with an ad for a pasta maker. When Facebook recognizes that a bride is planning a honeymoon in Florida, it can send her travel videos embedded with customized hotel offers. With everything Facebook brings to the party, the partnership ought to be a plus for the participating media brands. But some media partners are experiencing pangs of buyer’s remorse, because they fear Facebook may trim their split after they get hooked on this welcome new stream of incremental revenue. It seems fair to conclude that the media companies who took the leap felt they were damned if they did and damned if they didn’t. In the end, however, this was an offer they couldn’t refuse.

Wednesday, May 13, 2015

The LAT and U-T merger: Double trouble?

The pending purchase of the San Diego U-T by the Los Angeles Times represents a synergy not of strength but of tsoris. Tsoris, for the uninitiated, is the Yiddish word for trouble. And woe – unlike readership and revenues – has been plentiful at both of these newspapers in the last decade. As illustrated in the graphic below, the upcoming merger combines a faltering pair of former publishing powerlifters whose businesses are sagging as much today as the pecs of Arnold Schwarzenegger, the only governor in the history of California unable to correctly pronounce the name of the state (video). Here are the sobering metrics for the SoCal publishers:Both newspapers lost more than half of their weekday print circulation between 2004 and 2014, dropping their respective market penetrations to 15.6% of the households in Los Angeles County and 17.8% of the homes in San Diego County. Circulation data comes from the Alliance for Audited Media, an industry-funded group. In the same period, Sunday print circulation – which typically delivers half of the revenue and more than half of the profits at a newspaper – fell by 48.1% in Los Angeles and 45.6% in San Diego. While the financial performance of the two publications is not publicly available, it is possible to gauge the general health of the newspaper business by comparing the 10-year financial performance of Tribune Publishing Co., the parent of the LAT, with the publishing division of its predecessor company. The annual reports issued by the companies show that Tribune publishing revenues tumbled by 58.5% to $1.7 billion in 2014 from $4.1 billion in 2004. In the same period, earnings before interest, taxes, depreciation and amortization (EBITDA) fell 63.6% to $260 million in 2014 from $730 million in 2004.It must be emphasized that Tribune’s holdings were not identical over the 10 years, so this is not a strict apples-to-apples comparison. The predecessor company, which was roiled by the Zellistsas and an epic bankruptcy before it jettisoned its newspapers, divested Newsday in 2008. The new standalone publishing spinoff has started making fill-in acquisitions in the Baltimore and Chicago markets. Notwithstanding the imprecision of the available financial data, it is fair to conclude that both of the once enviable SoCal publishing franchises have seen better days. Hence, the question: “Why would anyone want to put these two struggling companies together?” Here’s a plausible answer: Tribune announced last week that it will pay $85 million to buy the U-T with an eye to consolidating operations as much as possible between the two newspapers. Normally, this means moving to a single production facility, a single administrative infrastructure, a combined advertising staff and a streamlined newsroom that can share content across the various titles. In other words, Tribune instantly can cut expenses by cutting staff in a way that is not readily visible to readers and advertisers. At the same time, there theoretically is a chance to boost revenue for the consolidated operation because the ad staff efficiently can offer both wider and more targeted regional coverage. Interestingly, the San Diego purchase could turn out to be only the first step in a multi-phase plan to consolidate all the major dailies from the Tehachapi Mountains at the north end of the Los Angeles basin to the Mexican border. After struggling under the erratic management of Aaron Kushner, it is entirely possible the Orange Country Register soon could be up for sale. If LAT bought the Register, it would own the only major paper separating it from San Diego. In the meantime, a group of smaller dailies in markets like Long Beach, Van Nuys and Whittier are immediately up for grabs as part of the auction of Digital First Media, a coast-to-coast publishing company that is being dumped by the disenchanted private investors who own it. While bigger may be better in many things in life, this seldom is the case when it comes to compounding woes. And that’s what the LAT is doing in buying the U-T. Even when two businesses are humming along smoothly, a merger takes months – if not years – to complete. A merger profoundly distracts the managers and employees in both companies, taking their eyes off the ball of their day-to-day jobs because each is wondering whether she will survive the inevitable game of musical chairs.The challenge is compounded when the business is troubled, because the mechanics of the merger necessarily have to take a back seat to the immediate problem of shoring up sales and meeting demanding profit targets. This is all happening, remember, amid recurring rounds of musical chairs. The challenge is most formidable of all when the reason the business is weak is because there is shrinking demand for your product in the marketplace. And this is precisely the problem that every newspaper faces. Without question, an ever-growing number of readers are shifting their attention to the digital media and an ever-growing number of brands are shifting their advertising budgets to pursue them. That’s why newspaper circulation, sales and profits have dived precipitously in the last decade. A roll-up strategy would make sense if Tribune had a plan to pivot its troubled newspapers to viable business models that would flourish in the digital era. But no such plan is evident. While the digital traffic reported by the LAT and U-T in the accompanying table looks impressively large, a quick check of census data raises questions. The 35 million unique monthly visitors claimed by the LAT is fully three times greater than the population of its home county. That is a hefty number, even if you credit the paper with a certain degree of national and global appeal. Similarly, the 3.4 million uniques reported at the U-T suggest that everyone in the county visits its digital sites at least once a month. That would be nice, if true. The nose-counting problem is common throughout the entire digital publishing industry and newspaper companies can’t be blamed for the limitations of the technology. But it’s important to keep these vagaries in perspective. There is no doubt, however, that Tribune, whose eroding top-line revenues faltered another 5.7% as recently as the first three months of this year, is underperforming its peers when it comes to digital revenue production. While the U.S. newspaper industry in 2013 generated an average of 16.5% of its ad revenues through the sale of digital advertising, digital media produced only 12% of Tribune’s sales in the first quarter of this year. The industry-wide figure for 2013 is the latest information available from the Newspaper Association of America. The Tribune’s performance is called out in its quarterly earnings statement, where the company promises little more than to do a better job of selling ads.

So, there you have it: Falling readership, tumbling sales, shrinking profits and a questionable digital strategy. It makes you wonder why Tribune wants to double its troubles.

Tuesday, May 12, 2015

4 new media platforms demanding attention

As if the web, mobile and social media were not enough to worry about, four new digital platforms are emerging to challenge the legacy publishers and broadcasters struggling to preserve the audiences and ad dollars that made them mighty. To dispense with any further suspense, the emerging technologies are Next-Gen Messaging Platforms, Wearable Technology, the Internet of Things and Automated Automobiles. A case can be made for developing new content and advertising formats for each of these broad categories, which represent hundreds of products and endless permutations. I will make a qualified case for doing so in a minute. First, a reality check:

Monday, May 11, 2015

Made in NYC: New business models for new media

That's the state of the art among the hustling, bustling start-up companies who are innovating the new business models for digital publishing in New York.

In a two-day tour that I organized last week for 50 senior global media executives on behalf of the International News Media Association, we visited with the leaders of B2C start-ups as varied as Vice and Food52, as well up-and-coming B2B ventures like Business Insider and Skift. We also met with the founders of five ventures aiming to put serious journalism, writing and ideas on the web: Atavist, Gothamist, Longform, Upworthy and Roads and Kingdoms. We also stopped by Complex Media, which has built a network of more than 100 owned and affiliated sites targeting twenty-something males.

The offices of each of these young companies was literally hot as they are, as an early taste of summer settled over New York. That's because they operate in tight, B-grade spaces with generally minimal access to such amenities as air conditioning or enough chairs to accommodate four-dozen visitors. But tight, spartan quarters evidently are the ideal environment to incubate fresh ideas that can be rapidly prototyped, launched, analyzed and refined – and then fed or killed, as the marketplace dictates.

Each of the companies is pursuing a different audience and a different business model. Although Vice has raised more than $500 million and has stated it will achieve close to $1 billion in sales this year, the rest of the ventures are small to middling at this point.

Not all of them necessarily will cross the chasm, but each is helping to write the new rules for new media, which are distinctly different from the rules followed by most of the old media companies. Old media companies would be well advised to pay attention to the newcomers. So, dudes, listen up:

Rule 1. Chose a large, well-defined and underserved vertical, whether it is the travel industry (Skift), sharing recipes among home cooks (Food 52) or the Millennial generation (Vice and Complex Media).

Rule 2. Develop quality content with an authentic voice. You may not like everything you see on Vice, but you have to admit it is authentic. And here are three words of advice as to the content you should endeavor to generate: Video, video and video.

Rule 3. Create community through active inter-activity. Upworthy was founded to find emotionally and intellectually compelling material and then make it as viral as possible through the use of clever headlines, clever copy and extra emphasis – you may have heard this one before – on video. Longform does roughly the same thing by curating and sharing links to well reported, well written and, yes, long articles. Taking community-building to another level, Food 52 actually was started to crowdsource recipes for a cookbook. After the book was published, the community kept growing organically and its founders – two women who head a staff composed almost entirely of fellow female foodies – wisely decided to go along for the ride.

Rule 4. Build quality traffic. As important as growing traffic is to proving the strength and viability of a nascent site, several entrepreneurs stressed that they are more concerned with the quality than the quantity of the page views they attract. To measure quality traffic, they monitor the types of stories their users select, the time they spend on site and the ways that they share content with others. Several publishers explicitly avoid running stories that could be construed as clickbait in favor of articles appealing to the readers they aim to attract. “This doesn't mean we won't run stories about Mark Zuckerberg's dog,” said Henry Blodgett, the founder and chief executive of Business Insider. “It turns out that people who are interested in his dog are interested in serious business stories, too.”

Rule 5. Diversify your revenue streams, as follows:

Sponsored content. Most of the sites are doing sponsored content, paid advertising or whatever you want to call it. Roads and Kingdoms, a site that melds travel tips and serious journalism, is hired by brands to produce what they call “off-site” sponsored content that doesn’t usually run on its own site.

Technology tools. Atavist built a content-management system to create the great-looking longform articles it wanted to feature in its eMagazine. Now, platform licenses are a major revenue stream for the company.

Content syndication. Vice has a video deal with HBO and is about to launch a new 24-hour cable channel with the Arts and Entertainment Network. Meanwhile, Atavist in some months generates the largest proportion of its revenues by selling the movie rights to the original stories it runs.

Memberships. Because most sites are intent on growing traffic, they tend to avoid the paywalls so popular among legacy publishers. The start-ups see paywalls not as revenue opportunities but, instead, as barriers to acquiring new subscribers. However, they implement paid services when they feel they can deliver sufficient value to make them desirable. Skift is generating a third of its sales by selling access to specially produced monthly reports that provide deep insights to industry leaders. Other publishers are thinking about ways to create premium access opportunities but aren't in a hurry to do anything that might constrain their growth.

Merchandising. This opportunity runs the gamut from generating commissions on the sale of iTunes playlists to merchandise orders placed at Amazon.Com. A third of revenues at Food 52 comes from the sale of kitchen gear, including products like the handmade, wooden biscuit cutters that are available exclusively on its site.

Physical media. A subset of merchandising is the sale of books, videos and other media produced by the digital site. The cookbook published by Food 52 is an example of this. Vice Magazine, the cornerstone of the global hip-hop empire, continues to be available in print, too.

Events. Companies like Skift and Business Insider conduct annual events to not only build revenues and community but also to position themselves as thought leaders in the verticals they hope to dominate. “It is better to do one big event well than to try to do a lot of small ones,” advises Rafat Ali, the founder and CEO of Skift.

Advertising. Although some sites depend on advertising more than others, most of the new media entrepreneurs agree that banner advertising supplied by networks represents what one called “a race to the bottom” in terms of quality and yields. The most successful sites – like Business Insider and Vice – sell most of their advertising directly at respectable, double-digit CPMs, as opposed to filling their inventory with network-generated advertising that yields low rates while often delivering spots that detract from the editorial environment they are seeking to maintain. When sites do use network advertising, they exercise close controls on the quality of the ads and often insist on guaranteed minimums from network partners.

Taken together, the diversity of the start-ups in this sampling demonstrates that there is no one-size-fits-all approach to levitating a new digital publishing venture. All of the entrepreneurs will tell you that it takes a lot of trial and error to find what works. But first and foremost, they say, you have to be willing to try.

Tuesday, April 14, 2015

‘No-hands’ ad sales challenge legacy media

Ever since legacy publishers and broadcasters got serious about selling interactive advertising, they have struggled with how to do it. Should veteran ad representatives be cross-trained to sell portfolios of traditional and digital advertising? This came to be known as the two-leg sales call.Should specially trained digital ad specialists accompany legacy reps on four-leg sales calls? Should digital marketing strategists accompany digital ad specialists and legacy reps on six-leg sales calls? Now, some of the biggest names in digital publishing are going in a decidedly different direction than flooding the zone with sales power: They are moving to zero-leg sales calls that eliminate human beings altogether. As the new year dawned, Microsoft and AOL jettisoned hundreds (but not all) of their ad sales people in favor of turning their digital inventories over to powerful computers that auction individual page impressions in 0.0000002 of a second – or less. The phenomenon, which aims to maximize the value of an ad by matching the right offer to the right person at the right time, is called programmatic ad buying or real-time bidding. (See video explainer below.)

The shift is being propelled by the growing adoption among marketers of systems that slice and dice Big Data about existing and prospective customers to target expenditures as efficiently as possible. The most ambitious implementations not only send ads to carefully targeted prospects but also dynamically tune product offerings, sales messages and even pricing to boost in-store and online sales. The reason three-martini Mad Men are being replaced by triple-latte Math Men is simple, says McKinsey & Co. in a white paper celebrating what it calls the “New Golden Age of Marketing” (here). “Long gone is spending guided mostly by intuition,” writes McKinsey. “Instead, organizations are seeking greater precision by measuring and managing the consumer decision points where well-timed outlays can make the biggest difference.” Prominent consumer brands are jumping in. As reported last year in Advertising Age, Proctor & Gamble elected to shift some three-quarters of its interactive ad spend to programmatic buying systems, while American Express tasked computers with disbursing 100% of its digital ad dollars. More than half of the estimated $11 billion in digital display ads purchased in the United States in 2014 were bought via programmatic systems, according to a survey by Magna Global, the international ad agency. Magna predicts that 82% of digital display ads will be bought and sold by computers by the end of 2018, driving more than $25 billion in volume. The rapid and enthusiastic adoption of programmatic advertising by major national and international brands is great news for major national and international digital publishers like Microsoft and AOL. Because they serve hundreds of millions of page views per month, Microsoft and AOL – which consistently rank among the 10 largest digital properties – attract enough visitors to serve the needs of marketers seeking everyone from vegetarian Scrabble players in Scotland to burger-munching baseball fans in Muncie. Given the operating scale, financial heft and technical prowess at these digital behemoths, they (and their peers) have invested in the technology necessary to track and categorize users so they can efficiently provide access to marketers arriving via the increasingly sophisticated ad-buying networks operated by Google/DoubleClick, Facebook and others. In other words, the digital heavyweights essentially are abandoning the ancient practice of selling banners by the bushel, encouraged by the realization that the ever-growing inventory of web and mobile inventory will continue to commoditize, and thus depress, the pricing for untargeted ads. While the efficiency inherent in programmatic selling encouraged Microsoft and AOL to trim their sales staffs, they did not axe all their ad folk. The companies retained representatives to make big, strategic deals that involve not only advertising, but also promotions ranging from content development to product placement to native advertising. The shift to no-hands selling by the digital biggies puts legacy publishers and broadcasters at a competitive disadvantage. Because they don’t operate at the breadth and scale of the major digital brands, the legacy media lack the traffic and, quite often, the detailed data necessary to extract full value for their inventories in the RTB marketplace. While local publishers and broadcasters can improve ad yields by partnering with third-party data firms to optimize their RTB performance, they likely will be forced to continue to rely on person-to-person selling for the foreseeable future. To amortize the high costs of high-touch selling by actual humans, the legacy media must become indispensable marketing partners to local businesses by providing a host of holistic, premium and recurring services, such as: digital site development and hosting, content production, native advertising, search optimization, reputation management and social media marketing. Local presence is the key advantage that legacy media have over their digital competitors. If they don’t use it, they will lose it. But they have to do so efficiently.

Wednesday, March 11, 2015

How to capture fly-by digital visitors

Now that most newspapers have been in the digital publishing business for the better part of two decades, it’s time for editors and publishers to pay attention to where their wired readers actually come from. And it’s not the front pages that editors lovingly tend on their websites and mobile apps. While research over the years consistently shows that about a third of the visitors at the typical digital site are individuals navigating directly to NameBrandNewspaperSite.Com, the preponderance of the traffic is from people referred to individual articles via search sites or the social media. Even though the Newspaper Association of America boasts that the industry’s digital media attract something north of 160 million unique users a month, the reality is that most of the these unique “readers” stop by once a week, once a month or once in a blue moon and typically linger for less than a minute. Then, they are off. That’s why many analysts call these incidental readers “fly-bys.”

With fly-bys representing two-thirds of digital readership, it behooves editors and publishers to learn as much about these individuals as they can. In many cases, however, they don’t know nearly enough. In still more cases, the interactive departments at newspapers fall short of doing the things necessary to capture the enduring interest of digital visitors whose eight-second attention spans are said by some researchers to be no greater than the concentration of a goldfish. The significance of third-party referrals was demonstrated emphatically last fall when Axel Springer, a major European publisher, blocked Google from linking to its articles because it objected to Google’s long-standing practice of not paying publishers for referring to their content. When traffic at the Springer sites slumped by some 40%, the publisher quickly invited the search giant to start crawling its sites again. To understand where digital traffic comes from, I gathered data from friends at newspapers of various sizes in various parts of the country, who participated on the condition that their publications would remain anonymous. The first thing I discovered is that there is no uniformity in the way newspapers count their digital traffic, making it difficult to benchmark performance or identify best practices. But, as discussed above, it was clear that two-thirds – or more – of the traffic at newspaper sites did not come through the front page. On average, about half of the third-party referrals came from search engines, about a quarter came from social media like Facebook or Twitter, and the balance came from “other” referrals like blogs, websites or emails from one friend to another. Thus, it is safe to say that fly-bys represent a rich opportunity for publishers to build a larger and more loyal readership in the digital realm than they enjoy today. Here’s how they can do so: :: Be nice. Treat every page you serve as though it were a reader’s first entry point, because, statistically speaking, it is. Instead of warning a non-subscriber that she has only 10 views left on a paper’s paywall-protected website, offer her a free month of unlimited access in exchange for providing her email address. Make sure the terms of the email registration enable you to send further marketing communications. :: Strut your stuff. To build click-through and dwell time, leverage your newspaper’s vast archives by promoting relevant content on every page. The invitation to stick around only works, of course, if you turn off the paywall alert, so the reader isn’t threatened with being banished from the site every time she clicks on a new article. :: Encourage sharing. People referred to your site by friends and social media are highly likely to be willing to refer others to you. Prominently post tools on every page to make it easy to share links to your content via Facebook, Twitter, Pinterest, Instagram, text and email. A great example of optimized sharing is at the Los Angeles Times website, which embeds pre-written Twitter messages into every story so readers can point, click and tweet. :: Start conversations. Because the digital media are two-way forms of communication, invite visitors to join the conversation by enhancing the visibility of comments and streamlining the process of adding to them. Going to the next level, consider soliciting user-generated photos, videos and other content wherever it makes sense to do so. Nothing will get visitors to promote your site to their friends faster than having a picture of them posted on it. :: Market, market, market. Once you have an email address, you can begin to build relationships through email newsletters, deals, coupons, contests, sweepstakes and other incentives that will engage visitors, keep them engaged and encourage them to provide the information you need to enhance your marketing activities. Remember, though, this only works if you start by being nice.

Wednesday, March 04, 2015

So long again, Chicago Daily News

On March 4, 1978, the presses fell silent for the last time at the Chicago Daily News, an iconic and crusading newspaper that was unable to adapt to changing times. The following article, which originally appeared here in 2005, is reprinted as a reminder of what happens when a paper runs out of readers, revenues and ideas. "It's fun being the publisher when things are going well," squeaked the young man who stumbled awkwardly to the top of a battered desk in the unusually silent newsroom of the Chicago Daily News. "But it's no fun today."Swallowing a nervous giggle, Marshall Field V cleared his throat and read the assembled staff the short, typewritten death warrant of one of the most distinguished newspapers in American history.An agonizing month later, on March 4, 1978, the Daily News signed off with the jaunty banner, "So long, Chicago."The line was written by the late nightside copy desk chief, Tom Gavagan, a chain-smoking, working-class Irishman who seemed to own only two shirts -- one in burnt orange, the other in avocado green. The tears in Gav's eyes weren't from the smoke.Although it happened 37 years ago, the story is worth telling today, because many of the zany, brainy people who made that paper sing aren't here to talk about it any more. They were my mentors, comrades and friends, and I cherish their memories.But this isn't just ancient history. It is a valuable reminder to today's media companies of what happens when you run out of readers, revenues and ideas all at the same time.The Daily News, like most afternoon newspapers, succumbed at the age of 102 to a declining audience and rising expenses.Its readers had moved on. On to the suburbs, where delivery trucks couldn't reach them with a paper that didn't come off the press until afternoon. On to the sofa, where they favored Three's Company on television.There were no home computers, no Internet, no iPods and no cellphones to get between our readers and us in 1978. Still, circulation dropped. The management was changed. Circulation dropped. We redesigned the paper. Circulation dropped. We tinkered with the product. Circulation dropped.In the end, there was nothing left to do. Some 300 people lost their jobs, and Chicago lost a great newspaper.The Daily News, in its best days, was a cutting-edge conscience in conservative Chicago, a husky, brawling town that wasn't always ready for reform. The paper stood fast against official incompetence and government corruption and stood tall for civil rights and the little guy. For years, the Daily News stubbornly held its price to a penny, so as to be affordable to laborers heading home from work.It was one of the first newspapers to have foreign correspondents, to print photographs or to cover that new-fangled medium, radio. Its widely syndicated coverage won 13 Pulitzer Prizes, including three for meritorious public service.The Daily News cultivated a limitless array of talent over a century, including Eugene Field, George Ade, Ben Hecht, Finley Peter Dunne, Carl Sandburg, Peter Lisagor, M.W. Newman, Lu Palmer, Lois Wille and our latter-day franchise player, Mike Royko.The list is too long to print here. But the Daily News, in its classy way, printed the name of everyone working on the staff on the day the paper folded.My name was on that list. It remains one of the proudest, and saddest, moments of my life.

Thursday, February 12, 2015

We’ll miss David Carr more than we know

With the rules of journalism and the media business evolving at Internet speed, David Carr was a savvy, centered and sensitive commentator who teased the facts from the frenzy with warmth, wit and faultless prose. He departed the madcap media beat prematurely when he died tonight at the tender age of 58, collapsing in the newsroom of New York Times. I am sure he was in no hurry to leave his beloved wife and daughters, but you can bet he was proud to die with his boots on. David was a generous friend and colleague, who readily carved time out of his blistering schedule to dope out a story or shoot the breeze over a stack of lemon-curd pancakes. For a skinny guy, he could eat an amazing amount. Last year, I persuaded him to fly across the country for the weekend to give the commencement speech at the Graduate School of Journalism at the University of California at Berkeley.“I am David Carr and I am an alcoholic,” he said in opening a humorously serious and seriously humorous talk (video below) that delighted and inspired the graduates, my colleagues and the assembled families. He even dropped the f-bomb a couple of times, a word that normally doesn’t come up at graduation ceremonies.But that’s who he was. Silly, smart, sincere, self-effacing and selfless. And he knew how to tell a story. With journalism imperiled these days at home and abroad, we need the likes of David on the beat more than ever. Now, we have lost him. Without David on the job, it is hard to know what we won’t know. But I am sure it will be a lot. What the f-bomb are we going to do?

Welcome to ‘Everyware’ computing

Our imaginative friends in the technology industry intend to make computing simpler and arguably more satisfying by making it more intuitive than ever. Here’s how: They will saturate our environment with vast arrays of computers and Internet-enabled sensors that will put all but the most technologically isolated individuals in a crossfire of constant monitoring, constant profiling, constant push notifications and constant behavioral analysis – so the process can be fine-tuned and repeated over and over again. The phenomenon is known variously as Ambient Computing, Pervasive Computing, Ubiquitous Computing or – my personal favorite – Everyware. So, let’s go with that. Everyware indeed may simplify our relationship with technology. Or it might snarl the wires of our wired lives even further. There are too many moving parts (as discussed in a moment) to predict exactly how Everyware will affect our personal lives and business.

But ubiquitous computing seems likely to have major impact on the media business, because it will all but eliminate the intermediary relationship that media companies require to build the audiences they traditionally have sold to advertisers. Assuming Everyware materializes as envisioned by Silicon Valley’s savants, it spontaneously will deliver targeted information and entertainment, while at the same time enabling marketers to maintain persistent, direct and dynamic one-to-one relationships with individual consumers. In that event, what roles will be left to gate-keeping editors and the media companies that employ them? Publishers and broadcasters need to start focusing on this, so here are the trends to watch: :: Mobile Computing. From headlines to selfies to shopping, smartphones and tablets have become indispensible vehicles for delivering intimate and individualized computing experiences. And people love them. The average American spends just under three hours a day consuming mobile media, according to eMarketer.Com. Back in 2010, mobile use was 24 minutes a day. :: Wearable Devices. Although the Google Glass project seems to have lost some of its gloss, companies like Apple, Lumo Body Tech and Ralph Lauren are working on a variety of wearable, sensor-rich products that respectively pinpoint your location, check your posture and monitor your heart rate. Although no one is certain how wearables will be used and which will emerge as winners, various industry forecasters reckon that sales in this emerging market will grow from near insignificance today to between $20 billion and $50 billion by 2018 (see slide 8 here). :: Internet of Things. The Nest thermostat is perhaps the best-known example of an Internet-connected device that matches your environment to your behavior to ensure comfort and energy efficiency. But a host of increasingly sophisticated in-home utilities are being rushed to market, as exemplified by Echo, a voice-activated ambient device from Amazon that searches the web, plays music and, naturally, helps you shop. Forrester Research predicts that the number of smart sensors in homes, businesses and vehicles will leap eightfold to 25 billion units by 2020. That’s a lot of smart Crock-Pots. :: Cloud Computing. Thanks to intense competition among Amazon, Microsoft, Google and other heavy hitters seeking to outsource computing for clients of every size, the costs of storing and crunching data will continue diving for the foreseeable future. The frenetic growth of cloud computing will lead to a fourfold increase to 6.5 zetabytes of the amount of data stored around the world by 2018, according to Cisco Systems. Read on to see how it will be used: :: Hyper-Personalization. The Big Data archived in the cloud contains all the bits and pieces of information captured about you through the above means, including but not limited to age, gender, residence, income, credit rating, family status, reading habits, commuting routines, social networks and shopping patterns. Depending how generously you share information on the web and how avidly you participate in frequent-shopper programs, the enduring and growing volume of information about you can be quite personal and granular, ranging from your preferred toothpaste to your demonstrated driving efficiency to your inferred sexual proclivities. :: Digital Advertising. To put the right offer in front of the right person in the right place at the right time, marketers aggressively are shifting their expenditures to the digital media, because you can’t achieve the same precision, efficiency and immediacy with print or broadcast advertising. By 2019, the sums spent on digital marketing will double to more than $100 billion from today’s level, according to Gartner Research. Digital ad spending surged 17% in 2013 to a record $42.8 billion, topping the sums spent on television for the first time, according to the Internet Advertising Bureau. The trade group said digital ad spending grew another 15% in the first half of 2014, so this looks like a durable trend. Although the ambient-computing environment is fluid and complex, the mounting array of evidence suggests that Everyware could change Everything for the media and advertising businesses. Now is the time to start paying attention.

About Me

Alan D. Mutter is perhaps the only CEO in Silicon Valley who knows how to set type one letter at a time.
Mutter began his career as a newspaper columnist and editor at the Chicago Daily News and later rose to City Editor of the Chicago Sun-Times. In 1984, he became No. 2 editor of the San Francisco Chronicle.
He left the newspaper business in 1988 to join InterMedia Partners, a start-up that became one of the largest cable-TV companies in the U.S.
Mutter was the COO of InterMedia when he moved to Silicon Valley in 1996 to join the first of the three start-up companies he led as CEO.
The companies he headed were a pioneering Internet service provider and two enterprise-software companies.
Mutter now is a consultant specializing in corporate initiatives and new media ventures involving journalism and technology. He ordinarily does not write about clients or subjects that will affect their interests. In the rare event he does, this will be fully disclosed.
Mutter also is on the adjunct faculty of the Graduate School of Journalism at the University of California at Berkeley.